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TMI Blog2022 (4) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... 019. 3 Case of the petitioner is that it is engaged in the business of providing event management services to its clients. It had obtained service tax registration under the Finance Act, 1994 since its incorporation in the year 2009. It is stated that since its inception, petitioner was filing service tax returns and paying the due service tax. 4 However, because of financial problems, petitioner could not pay service tax for the period from April, 2016 to June, 2017. The total amount of service tax dues to be paid by the petitioner for the aforesaid period is Rs. 1,72,93,758.00 5 While presenting the budget for the year 2019-2020, Government of India, Ministry of Finance introduced a scheme called Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Subsequently, Central Government also notified the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 to operationalize the scheme from 01.09.2019 to 31.12.2019. 6 It is stated that Sabka Vishwas (Legacy Dispute Resolution) Scheme has facility for voluntary disclosure of tax dues. In such a case, the declarant has to pay the full tax declared but is not required to pay interest and penalty, besides being provided immun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 758-00. It is stated that verification report was sought for on 25.09.2019 from the Deputy Commissioner (Anti-evasion) as regards the declaration filed by the petitioner. Deputy Commissioner submitted letter dated 26.09.2019 providing detailed verification report. In the meanwhile, a letter was addressed to the petitioner on 23.07.2019 calling for data for the year 2014-2015 based on 3rd party information. Petitioner sought for time vide letter dated 09.08.2019. Deputy Commissioner had sent e-mails dated 26.08.2019 and 04.09.2019 calling for details of petitioner's income and tax paid for the period 2014-2015, 2015-2016, 2016-2017 and 2017-2018 (up to June, 2017). Petitioner, vide e-mail dated 09.09.2019, furnished profit and loss account and balance sheet for the years 2015-2016, 2016-2017 and 2017-2018. Thereafter, responding to summons dated 11.09.2019, petitioner appeared before the concerned Superintendent (Anti-evasion) on 16.09.2019; whereafter, statement of authorised person (Managing Director) was recorded. In the circumstances, the Deputy Commissioner opined that tax payers who are subjected to enquiry or investigation or audit are not eligible to make a declaration under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notified in the Gazette of India on 01.08.2019. While proposing the scheme, as part of her budget speech for the year 2019- 2020, Finance Minister, Government of India, stated thus: "GST has just completed two years. An area that concerns me is that we have huge pending litigations from pre-GST regime. More than Rs. 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow the business to move on. I, therefore, propose, a Legacy Dispute Resolution scheme that will allow quick closure of these litigations. I would urge the trade and business to avail this opportunity and be free from legacy litigations." 17 Statement of object and reasons with respect to the scheme reads as under: "The scheme is a one time measure for liquidation of past disputes of central excise and service tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The scheme shall be enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax due and pay the same in accordance with the provisions of the scheme. It further provides for certain immunities i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: "12. The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 has the potential to liquidate the huge outstanding litigation and free the taxpayers from the burden of litigation and investigation under the legacy taxes. The administrative machinery of the Government will also be able to fully focus on helping the taxpayers in the smooth implementation of GST. Thus, the importance of making this scheme a grand success cannot be overstated. The Principal Chief Commissioners/Principal Directors General/Chief Commissioners / Directors General and all officers and staff are instructed to familiarize themselves with this scheme and actively ensure its smooth implementation." 20 Thus, from an analysis of the above, it is discernible that the scheme is a beneficial one with the prime object of unloading the baggage of pending litigations centering around service tax and excise duty. As a onetime measure, the focus is to unload this baggage of pre-GST regime and thereby allowing business to move ahead, but at the same time, to also ensure that the administrative machinery can focus fully in the smooth implementation of GST. This is the broad picture which should be kept in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-Section (1) of Section 125, a person who has been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before 30.06.2019. Clause (f) is also relevant. It says that a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit or having filed the return under the concerned indirect tax enactment wherein he has indicated an amount of duty as payable but has not paid it would also not be eligible. 26 While Sub-Section (1) of Section 126 says that correctness of a declaration made by a declarant would be verified by the designated committee, composition and functioning of the designated committee is provided for in Sub-Section (2). As per proviso to Sub-Section (1) no such verification shall be made in a case where a voluntary disclosure of an amount of duty has been made by the declarant. 27 Section 127 provides for issue of statement by the designated committee. As per Sub-Section (1) where the amount estimated to be payable by the declarant as estimated by the designated committee equals the amount declared by the declarant, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars furnished in the declaration is subsequently found to be false within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted. 30 Section 132 is the rule making provision whereas, under Section 133, the Board has been conferred the power to issue orders, instructions and directions to the authorities from time to time. 31 It may be mentioned that Central Government had issued notification dated 21.08.2019 appointing 01.09.2019 as the date on which the scheme came into force. 32 In exercise of the powers conferred under Section 132, Central Government has framed the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019. 33 The Board issued another circular dated 12.12.2019. Referring to the previous circulars dated 27.08.2019, 25.09.2019 and 29.10.2019, it was mentioned that subsequently Board had received further references from field formations as well as from the trade seeking certain clarifications about the scheme. After considering the same Board issued the clarifications vide the above circular. In paragraph No.2 (v) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference has been made to Section 125 (1) (f) of the Finance (No.2) Act, 2019 wherefrom it is stated that a person making voluntary disclosure under the Act after being subjected to any enquiry or investigation or audit or having filed the return under the indirect tax enactment wherein he has indicated an amount of duty as payable but has not paid it, shall not be entitled to make such declaration. It is stated that designated committee had examined report of Anti-evasion Branch dated 23.07.2019 and found that departmental investigation into evasion of tax by the petitioner had been initiated on 23.07.2019. In this connection summons dated 11.09.2019 was issued under Section 70 of the Central Goods and Services Tax Act, 2017. According to the designated committee, the declaration was filed by the petitioner subsequent to the date of initiation of such investigation by the department. Accordingly, designated committee found that provisions of Section 125 (1) (f) would be attracted thereby making the petitioner ineligible under the scheme. Therefore, designated committee decided to reject the declaration of the petitioner. 38 From the impugned intimation dated 27.09.2019 what is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is conjunctive inasmuch as it joins the two parts of the said provision. As a consequence, the provision has to be read in continuum i.e. as a whole. Read so, it would mean that at the time of filing the declaration, the declarant must be subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit had not been quantified on or before 30.06.2019. In other words, the enquiry or investigation or audit should be pending as on 30.06.2019. 41 Insofar Section 125 (1) (f) is concerned, a person would be ineligible to make a declaration in terms of the scheme under the category 'voluntary disclosure' after being subjected to an enquiry or investigation or audit; or having filed the return under the indirect tax enactment wherein he has indicated an amount of duty as payable but has not paid it. Thus, Section 125 (1) (f) also has two parts. As per the first part, the declarant should not be subjected to any enquiry or investigation or audit at the time of making the declaration under the category 'voluntary disclosure'. The second part is that if a person had filed the return under the concerned indirect tax enactment wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to certain enquiry for non-payment of service tax. The summons being so vague would have to be read together with the letter dated 23.07.2019. On a conjoint reading of the two it would mean that the verification pertains to the period 2014- 2015. Therefore, on due consideration, it cannot be said that petitioner was subjected to any enquiry or investigation or audit as on 30.06.2019 and pertaining to the period covered by the declaration at the time of making the declaration. 44 Interestingly, if we minutely look at the provisions of the scheme, we find that in the case of a declaration under the category 'voluntary disclosure' no relief is available to the declarant with respect to the tax dues for the period for which the declaration is made. However, such a declarant shall not be liable to pay interest or liable to be prosecuted under the concerned indirect tax enactment with respect to the matter and time period covered in the declaration. In fact, in a case of voluntary disclosure, proviso to Sub-Section (1) of Section 126 makes it very clear that no verification shall be made by the designated committee. Section 129 (2) (c) further says that in a case of voluntary disclosure ..... 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